Requlred Information

The Foundational $15($Algo$)[$LO$11-2,$ LO$11-3,$ LO$11-4,$ LO$11-5,$ LO$11-6]$

$[$The following information applles to the questions displayed below.$]$

Cane Company manufactures two products called Alpha and Beta that sell for $$165$ and $$130,$ respectively. Each product

uses only one type of raw material that costs $$8$ per pound. The company has the capacity to annually produce $113,000$

units of each product. Its average cost per unit for each product at this level of activity are given below:

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses

are unavoidable and have been allocated to products based on sales dollars.

Foundational $11-9($Algo$)$

Assume that Cane expects to produce and sell $89,000$ Alphas during the current year. A supplier has offered to manufacture and

deliver $89,000$ Alphas to Cane for a price of $$116$ per unit. What is the financial advantage $($disadvantage$)$ of buying $89,000$ units from

the supplier instead of making those units?